CHICAGO, May 7 (Reuters) - Motorola Inc.
(nyse: MOT
- news
- people),
the world's second-largest handset maker, expects its mobile phone
unit to return to profitability in the fourth quarter, the head of
the unit said Monday.

Mike
Zafirovski, president of Motorola's Personal Communications Sector,
told a conference call with JP Morgan H&Q that the company was
on track to narrow its product line and cut costs to boost its
profitability.

"We will be
profitable in the fourth quarter," Zafirovski said. "We have made
the absolute commitment that we will have a very, very compelling
product line, very compelling cost structures, as well as a cost
alignment with our supply chain organization."

Zafirovski made his comments ahead of Motorola's
annual shareholders meeting, which was slated for late
Monday.

Motorola's PCS unit
last month reported a first-quarter operating loss of $402 million
compared with operating earnings of $53 million in the year-ago
first quarter. The company cited a slowdown in handset
sales.

In the conference call,
Zafirovski reiterated his plan to reduce the complexity of
Motorola's phones by 75 percent and cut manufacturing costs by 25
percent.

He said Motorola's
phones will have 40 to 45 percent of their parts in common by the
end of the year compared with the current 10 to 20 percent. He
expects that figure to reach 75 to 80 percent in
2002.

Motorola's phone unit has
been criticized in the past for its high manufacturing costs, which
were the result of developing many different phone models that
require different hardware and software parts.

Motorola rival Nokia Corp. (nyse: NOK
- news
- people)
<NOK1V.HE>, the world's largest mobile phone maker, has been
successful in part because it has effectively used common parts to
keep its costs down.

Zafirovski, who believes profitability and market
share go hand-in-hand, said Motorola should start gaining market
share "before the year is over."

He said his goal was to increase Motorola's market
share to 20-25 percent within the next two to three
years.

According to research
group Gartner, Motorola's mobile phone market share fell to 12.7
percent in the fourth quarter from 14.1 percent in the third.
Nokia's market share, on the other hand, grew to 33.9 percent from
31.4 percent.

"We do not like
the fact that we've become a marginal number two in the last three
to four years," Zafirovski said. "We will be playing to win... We
will not lose market share going forward."

Shares of Motorola rose 18 cents, or 1.09 percent,
at $16.62 on the New York Stock Exchange in midday trade. Their year
high was $39.50 and their year low was $10.50.